After purchasing a meager 6.1 tonnes of gold in April, Russia roared back into the market to buy 21.8 tonnes (700,000 ounces) of the yellow metal in May. That brings gold holdings of the Central Bank of the Russian Federation up to 1,708 tonnes (54.9 million troy ounces) as of June 1. The value of its holdings rose to $69.30 billion.
Russia has been on a steady pace of converting its dollar currency holdings into gold for a number of years and is now the sixth largest gold owner in the world behind China. It may surpass China to take over the Number 5 spot sometime late this year or early next year if the relative reported pace of gold acquisitions for the two countries remains the same.
China has not reported any gold purchases for several months, though some gold market observers speculate they may likely be secretly buying gold but not reporting it.
British multinational bank Standard Chartered sees gold more likely to be at $1,300 per ounce by the end of the year than at $1,200. In a report issued by the bank this week, precious-metals analyst Suki Cooper hiked Standard’s fourth-quarter forecast to $1,300 from the previous $1,230.
“We believe prices are more likely to breach $1,300/oz than test the downside by year-end…,” the report said.
Standard cites several reasons for its upbeat outlook for gold: a more dovish US Fed, less likely increases in 10-year US Treasury yields, and indications that India’s new Goods and Services Tax regime will be a temporary speed bump and not a fundamental structural change for the gold market.
It’s not clear sailing for gold, the bank said, as the market can be affected by the Fed’s balance-sheet reduction, slower inflation than expected, and glitches in execution of India’s GST plan.
Standard expects one more rate hike from the US Fed this year, but anticipates that there will only be two additional rate bumps in 2017 instead of the planned three.
“There is also growing evidence that Trump will be unable to push through a significant fiscal stimulus package,” the bank said, adding that this suggests lows for gold prices will be around $1,220 to $1,240.